Cypress Creek Fayridge, LP v. Harris County Appraisal District
01-16-00003-CV
| Tex. App. | Dec 8, 2016

Background

  • Cypress Creek Fayridge, L.P. appealed Harris County Appraisal District’s 2013 appraisal of its low‑income apartment complex as excessive; trial court found value $5,080,589 for 2013 and entered judgment for the District.
  • Property: 152 units, 148 rent‑restricted low‑income units; construction finished by Jan 1, 2013; ~64.5% occupancy on that date; not fully income‑producing on Jan 1, 2012.
  • Cypress Creek’s witness, Brian Cogburn (licensed broker, not a licensed appraiser), offered a broker’s price opinion valuing the property at $2,210,882 based on audited financials showing negative net operating income.
  • HCAD’s expert, David Brantley (registered appraiser), used the income approach, relied on TDHCA operating‑expense comparables and regional market data, and concluded value $5,080,589.
  • Trial court found Cogburn’s valuation not persuasive, found Brantley credible, and concluded Cypress Creek failed to meet its burden to show a different value; new trial denied.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Burden of proof in tax‑appraisal suit Appraisal District bears burden to prove its appraisal correct; if District fails, taxpayer wins. Taxpayer bears burden to prove appraisal excessive (as this court has held). Court assumed burden assignment non‑dispositive and affirmed on sufficiency; prior First District precedent assigns burden to taxpayer.
Legal sufficiency of District’s valuation (use of comparable expense data vs. actual audited expenses) Cogburn: District’s expert should have relied on property’s audited expenses showing negative NOI; use of TDHCA averages was speculative and ignored property‑specific evidence. Brantley: Required to analyze comparable operating‑expense data; TDHCA data reflected typical expenses for similar low‑income properties and was appropriate given the property’s changed status between 2012 and 2013. Court held Brantley’s reliance on TDHCA data and consideration of audited statements sufficed; testimony was not speculative and evidence legally sufficient.
Factual sufficiency (credibility and weight) Cogburn’s valuation explained by audited statements; property’s negative prior income undermines District’s projection. Cogburn was not a licensed appraiser, did not follow USPAP, and ignored that property became income‑producing by Jan 1, 2013; trial court as factfinder could reject his testimony. Court deferred to trial court’s credibility determinations; evidence was not so weak as to be clearly wrong.

Key Cases Cited

  • Republic Petrol. v. Dynamic Offshore Res., 474 S.W.3d 424 (Tex. App.—Houston [1st Dist.] 2015) (legal‑sufficiency standard when challenger did not bear burden of proof)
  • Jones v. Pesak Bros. Constr., 416 S.W.3d 618 (Tex. App.—Houston [1st Dist.] 2013) (standard when challenger bore burden of proof)
  • Briggs Equip. Tr. v. Harris Cty. Appraisal Dist., 294 S.W.3d 667 (Tex. App.—Houston [1st Dist.] 2009) (taxpayer bears burden in appraisal suits per First District precedent)
  • N.Y. Party Shuttle v. Bilello, 414 S.W.3d 206 (Tex. App.—Houston [1st Dist.] 2013) (bench‑trial review and deference to factfinder)
  • James J. Flanagan Shipping Corp. v. Del Monte Fresh Produce, 403 S.W.3d 360 (Tex. App.—Houston [1st Dist.] 2013) (factfinder’s role in resolving witness credibility)
  • Dupree v. Boniuk Interests, Ltd., 472 S.W.3d 355 (Tex. App.—Houston [1st Dist.] 2015) (factual‑sufficiency standard for bench trials)
  • Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150 (Tex. 2012) (definition of speculative testimony)
  • Szczepanik v. First S. Tr. Co., 883 S.W.2d 648 (Tex. 1994) (testimony speculative if lacking evidentiary foundation)
  • Wal‑Mart Stores, Inc. v. Merrell, 313 S.W.3d 837 (Tex. 2010) (expert testimony must have objective, evidence‑based support)
  • Harris Cty. Appraisal Dist. v. Houston Laureate Assocs., 329 S.W.3d 52 (Tex. App.—Houston [14th Dist.] 2010) (comparability based on appraisal‑district data can be reliable)
  • W. AH 406 Ltd. v. Cent. Appraisal Dist. of Taylor Cty., 213 S.W.3d 544 (Tex. App.—Eastland 2007) (requirement to account for rent and occupancy restrictions)
  • Haney v. Cooke Cty. Tax Appraisal Dist., 782 S.W.2d 349 (Tex. App.—Fort Worth 1989) (requirement to account for property‑specific conditions)
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